Outsourcing Problems . . . Again: Outside contractors to get increased FAA surveillance . . . right!

Outsourcing Problems . . . Again
Outside contractors to get increased FAA surveillance . . . right!

Stephen P. PrenticeThe investigations of several recent accidents have raised flags on a potential weak spot in our industry.

I commented on this area some time ago and perhaps it is time to review what is becoming a significant concern to the technician employment market and the air carrier business in general.

History
Outsourcing raised serious issues during the ValuJet accident investigation a few years ago. It was found that the outside contractor removing and replacing oxygen generators was not properly supervised and many employees not certificated. The air carrier was not properly supervising the work. Federal Air Regulations (FAR) require the air carrier to be responsible for its outsourced work. Since the carrier is responsible for the work (FAR 121.363a,b) it behooves it to have audit personnel at the repair facility to monitor and inspect. In the case of Valujet it just did not exist and even today remains very spotty at best in the usual case. This may change now with FAA's planned increase in contractor surveillance.

Air carrier technicians and inspectors should be assigned to supervise work done at any outsource facility used by an air carrier. This will of course require additional in-house maintenance staff to adequately supervise and inspect the work being done. This will cost more money. More about this later.

Commuter accident in Charlotte
The recent commuter accident at Charlotte raised further concerns when it was alleged that the outside contract mechanics performing maintenance on the accident aircraft were not trained properly and had no previous experience performing the particular job that was the subject of the maintenance (elevator cable adjustments). The FARs require:
An aircraft mechanic must be trained on a particular job and must have performed it at least once under supervision before being allowed to complete it on his own and release an aircraft to service. (FAR 65.81a,b).

It was reported in this case that the mechanic who performed the work and the inspector worked for different companies and the air carrier did not perform any work on the aircraft. More importantly, the air carrier did not supervise and inspect the work of the contractors as required by FAR 121.363b. These were serious allegations.

Granted, the crew was found negligent in regard to the heavy aft loading of the commuter plane. The captain and the first officer were reported to be laughing about ground crew comments on the heavy aft loading. On takeoff, the aircraft pitched up and assumed an extreme nose up attitude. It is thought that the pilots could not correct this due to the elevator system being mis-rigged. The aircraft stalled and crashed killing all aboard.

The reason for outsourcing
The NTSB in this accident investigation raised concerns that outsourced maintenance had divided the responsibilities for the work with a lack of direct oversight by anybody at the airline. Outsourcing arrangements are designed to do one thing and one thing only . . . reduce costs. The usual reason for outsourcing is to lower the cost of maintenance. This can also lead to a reduction of the need for skilled A&P technicians at the airline. The main problem is that some contract workers have little aircraft-specific training and expertise and many are noncertificated mechanics. The rules allow a contractor to hire noncertified workers and supervise them with a few higher paid certified mechanics. This could be a formula for disaster as was the case in the ValuJet accident. When an airline farms out maintenance it is for one reason . . . to save money and remove the necessity for higher paid staff. At the same time it usually removes the necessity of dealing with a mechanics union as well.

The DOT
Third-party maintenance has gotten the attention of the Inspector General of the Department of Transportation (DOT). He has stated that he is concerned with the amount of money spent on outsourced maintenance. According to his statistics 47 percent of all maintenance dollars went to the third-party facilities. Bankruptcies in the past few years will push this figure over the 50 percent mark.

We all know that United Air Lines is in bankruptcy. United could possibly be the poster child for outsourcing. It has been in bankruptcy proceedings for some time now and has scheduled the shutdown of both Oakland and Indianapolis major repair facilities. You know who will get this business. The Indianapolis facility is fairly new. It was built in 1991 with a lot of financial assistance from the city.

In any case, it is quite likely that the real reasons for the United shutdowns are the need to outsource its maintenance and reduce costs. Many estimate that outsourcing cuts the cost of labor in half! Most third-party contractor facilities are nonunion.

Even so, overseas and domestic foreign owned facilities pull more and more work from U.S. carriers. U.S. jobs are disappearing fast. And we talked of a shortage just a year ago. The speed with which in-house airline union jobs are disappearing is alarming to many.

More examples
Another example of penny pinching maintenance costs was the virtual shutting down of the maintenance department at America West a few years ago in favor of farming out all of its maintenance. A total of 375 technicians were let go in an effort to improve the bottom line. This writer touched on this subject a few issues back. The maintenance at the contractor was shoddy and found to be poorly supervised by the air carrier. America West was hit with the highest cash penalty ever levied by the FAA for violations by its outside contractor. Five million dollars was paid in settlement of a much larger fine for violation of the FARs on its outsourced maintenance.

There was also the accident involving the SAS DC10 that went into the ocean off Canada with an internal fire. It was found that the outside contractor who installed TV and telephone lines into the aircraft improperly installed the wires. This caused a fire in the bowels of the ship. Another case where inadequate supervision led to disaster in the air.

There is another more practical reason why air carriers favor outside contractors for their maintenance. When they do in-house maintenance the carrier is usually under greater scrutiny by FAA maintenance inspectors who are specifically assigned to the airline. These inspectors, as we all know, are usually at the home facility and/or at out stations on a daily or weekly basis in order to ensure compliance with regulatory standards. They keep tabs on maintenance by reviewing work records and flight records and seeing firsthand that the regulations are followed. When work is farmed out there is little need for FAA in-house maintenance oversight at the carrier. It follows then that there is usually less chance of being cited for violations thus avoiding fines or certificate action.

Sure the air carrier is the final responsible party but in the real world the outside contractor does not get the surveillance that the air carrier would if it performed its own maintenance. Reports state that outside contractors get considerably less attention from the FAA than the in-house maintenance facilities. This is slated to change, according to FAA sources.

Foreign repair facilities big loophole in TSA security and oversight
Everybody in our business now knows of the intense pressure on mechanics and other airline personnel regarding the Transportation Security Administration (TSA) and its power to control your employment in the industry. A simple misdemeanor conviction or domestic disturbance can result in termination at your job by finding you a terrorist threat. And as we all know, there is still no appeal procedure from action by the TSA. There is only a summary decision by a TSA lawyer who reviews your case. That's it.

Who does the background checks on all the overseas and domestic repair stations that work on many of the U.S. aircraft now?

Meanwhile we fire and remove airman certificates for stupid reasons that make no sense at all. It seems that our bureaucrats don't care about all the noncitizens who work on U.S. aircraft! If the rules were rigidly enforced most maintenance would probably be brought back to the United States. There was a time when there was no overseas work permitted on U.S. commercial aircraft. How things have changed!

Legislation pending - HR 2144 Aviation Security Technical Corrections and Improvements Act of 2003 Section 1526 Foreign Repair Station Security
There is now pending in the Congress legislation designed to impose our rules regarding background, hopefully including alcohol and drug testing, checks on foreign repair stations that work on U.S. registered aircraft. The law has been passed by the Senate and is now pending approval in the House (HR 2144, Section 1526). Security audits and inspections would be required of all foreign repair stations. Security risks at foreign repair stations must be addressed and the same rules that apply to our domestic repair facilities should be required of all foreign stations that work on U.S. registered aircraft.

Section 1526: Security review and audit

"To insure the security of maintenance and repair work conducted on U.S. aircraft and components at foreign aircraft repair stations, the Under Secretary for Border and Transportation Security, in consultation with the Administrator of the FAA, shall complete a security review and audit of foreign aircraft repair stations certified by the Administrator under Part 145 of Title 14 Code of Federal Regulations . . ."

It should be noted that these security audits are to be done by the TSA and not FAA personnel as presently written. This law can change before it is approved by the House however.

Joint Aviation Authority overseas repair facility (JAA)
Overseas contract repair stations have for some time had the right to work on U.S. air carrier aircraft, although this was not always the case. These facilities get little or no oversight by FAA yet they are routinely approved to work on U.S. flag carriers. Reports indicate that there is little oversight at foreign FAA and JAA approved repair facilities. How can we expect the FAA to police overseas repair facilities when it doesn't have the staff to adequately police our own domestic contract repair facilities? This may change shortly!

Staffing problems
The lack of adequate staff in FAA oversight positions has continued to dog the FAA. In addition, add to this the popular desire for political correctness and it soon becomes apparent that the effectiveness of inspection personnel has been degraded and in some cases compromised. There are many reports of in-house backbiting and selective punishment. Many FSDO's around the country are well known for extremely poor morale at this time. Let's hope it improves. Please send any comments to aerolaw@att.net. We'll just have to wait and see if the increased surveillance thing happens.


Stephen P. Prentice is an attorney whose practice involves FAA-NTSB issues. He has an Airframe and Powerplant certificate and is an ATP rated pilot. He worked with Western Airlines and the Allison Division of GMC in Latin America, servicing commercial and military overhaul activities and is a USAF veteran. E-mail: aerolaw@att.net.

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